Manufacturing ISM Rebounds Slightly but Employment Drops; ISM at a Glance

US Manufacturing as measured by the June 2013 Manufacturing ISM Report On Business® is treading water barely above contraction.

Economic activity in the manufacturing sector expanded in June following one month of contraction, and the overall economy grew for the 49th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI™ registered 50.9 percent, an increase of 1.9 percentage points from May's reading of 49 percent, indicating expansion in the manufacturing sector for the fifth time in the first six months of 2013. The New Orders Index increased in June by 3.1 percentage points to 51.9 percent, and the Production Index increased by 4.8 percentage points to 53.4 percent. The Employment Index registered 48.7 percent, a decrease of 1.4 percentage points compared to May's reading of 50.1 percent.

Manufacturing employment contracted for the first time since September 2009, when the index registered 47.8 percent. The Prices Index registered 52.5 percent, increasing 3 percentage points from May, indicating that overall raw materials prices increased from last month. Comments from the panel generally indicate slow growth and improving business conditions."

ISM at a Glance

Series Data	Apr Index	Mar Index	Percentage Point Change	Direction	Rate of Change	Trend (Months)
PMI™	50.9	49.0	+1.9	Growing	From Contracting	1
New Orders	51.9	48.8	+3.1	Growing	From Contracting	1
Production	53.4	48.6	+4.8	Growing	From Contracting	1
Employment	48.7	50.1	-1.4	Contracting	From Growing	1
Supplier Deliveries	50.0	48.7	+1.3	Unchanged	From Faster	1
Inventories	50.5	49.0	+1.5	Growing	From Contracting	1
Customers' Inventories	45.0	46.0	-1.0	Too Low	Faster	19
Prices	52.5	49.5	+3.0	Increasing	From Decreasing	1
Backlog of Orders	46.5	48.0	-1.5	Contracting	Faster	2
Exports	54.5	51.0	+3.5	Growing	Faster	7
Imports	56.0	54.5	+1.5	Growing	Faster	5

Synopsis

In my June 3 Manufacturing PMI Synopsis I stated "The consensus estimate was for slower growth, but here we are. Manufacturing is in contraction and the economy continues to weaken. Given the plunge in new orders and backlog of orders, jobs and the overall economy will likely weaken as well. Expect that trend of 48 months of economic growth to break next month."

The trend of overall economic growth did not break as the economy purportedly grew for the 49th month (confusing as the PMI was in contraction last month but the ISM's estimate of growth was not).

However, the 44 month history of manufacturing employment growth is now history. Expect the rest of the economy to soon follow.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com